ON Semiconductor Reports Third Quarter 2019 Results

ON Semiconductor and the ON Semiconductor logo are registered trademarks of Semiconductor Components Industries, LLC. All other brand and product names appearing in this document are registered trademarks or trademarks of their respective holders. Although the company references its Web site in this news release, such information on the Web site is not to be incorporated herein.

This document contains “forward-looking statements,” as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated in this document could be deemed forward-looking statements, particularly statements about the future financial performance of ON Semiconductor, including financial guidance for the year ending December 31, 2019. Forward-looking statements are often characterized by the use of words such as “believes,” “estimates,” “expects,” “projects,” “may,” “will,” “intends,” “plans” or “anticipates” or by discussions of strategy, plans or intentions. All forward-looking statements in this document are made based on our current expectations, forecasts, estimates and assumptions and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. Among these factors are our revenue and operating performance; economic conditions and markets (including current financial conditions); risks related to our ability to meet our assumptions regarding outlook for revenue and gross margin as a percentage of revenue; effects of exchange rate fluctuations; the cyclical nature of the semiconductor industry; changes in demand for our products; changes in inventories at our customers and distributors; risks associated with restructuring actions and workforce reductions; technological and product development risks; enforcement and protection of our intellectual property rights and related risks; risks related to the security of our information systems and secured network; availability of raw materials, electricity, gas, water and other supply chain uncertainties; our ability to effectively shift production to other facilities when required in order to maintain supply continuity for our customers; variable demand and the aggressive pricing environment for semiconductor products; our ability to successfully manufacture in increasing volumes on a cost-effective basis and with acceptable quality for our current products; risks associated with our acquisitions and dispositions generally, including our ability to realize the anticipated benefits of our acquisitions and dispositions, including our acquisition of Quantenna; risks that acquisitions or dispositions may disrupt our current plans and operations, (including the risk of unexpected costs, charges or expenses resulting from acquisitions or dispositions and difficulties arising from integrating and consolidating acquired businesses, our timely filing of financial information with the Securities and Exchange Commission (“SEC”) for acquired businesses and our ability to accurately predict the future financial performance of acquired businesses); competitor actions, including the adverse impact of competitor product announcements; pricing and gross profit pressures; risks associated with the addition of Huawei Technologies Co., Ltd. and its non-U.S. affiliates and subsidiaries, and other customers, to the U.S. Department of Commerce, Bureau of Industry Security Entity List; loss of key customers; risks associated with restructuring actions and workforce reductions; order cancellations or reduced bookings; changes in manufacturing yields; control of costs and expenses and realization of cost savings and synergies from restructurings; the costs to defend against or pursue litigation and the potential significant costs associated with adverse litigation outcomes; risks associated with decisions to expend cash reserves for various uses in accordance with our capital allocation policy such as debt prepayment, stock repurchases or acquisitions rather than to retain such cash for future needs; risks associated with our substantial leverage and restrictive covenants in our debt agreements that may be in place from time to time; risks associated with our worldwide operations, including changes in trade policies, foreign employment and labor matters associated with unions and collective bargaining arrangements, continuing political unrest in markets in which we do significant business, including Hong Kong, as well as man-made and/or natural disasters affecting our operations or financial results; the threat or occurrence of international armed conflict and terrorist activities both in the United States and internationally; risks of changes in U.S. or international tax rates or legislation; risks and costs associated with increased and new regulation of corporate governance and disclosure standards; risks related to new legal requirements; and risks and expenses involving environmental or other governmental regulation. Additional factors that could affect our future results or events are described under Part I, Item 1A “Risk Factors” in our 2018 Annual Report on Form 10-K filed with the SEC on February 20, 2019 (our "2018 Form 10-K") and from time to time in our other SEC reports. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information, except as may be required by law. You should carefully consider the trends, risks and uncertainties described in this document, our 2018 Form 10-K and other reports filed with or furnished to the SEC before making any investment decision with respect to our securities. If any of these trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline, and you could lose all or part of your investment. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this cautionary statement.

ON SEMICONDUCTOR CORPORATION

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

(in millions, except per share data)

 

Quarters Ended

 

Nine Months Ended

 

September
27, 2019

 

June 28,
2019

 

September
28, 2018

 

September
27, 2019

 

September
28, 2018

Revenue

$

 

1,381.8

 

 

$

 

1,347.7

 

 

$

 

1,541.7

 

 

$

 

4,116.1

 

 

$

 

4,375.2

 

Cost of revenue (exclusive of amortization shown below)

 

906.6

 

 

 

848.7

 

 

 

945.1

 

 

 

2,628.2

 

 

 

2,706.2

 

Gross profit

 

475.2

 

 

 

499.0

 

 

 

596.6

 

 

 

1,487.9

 

 

 

1,669.0

 

Gross margin

 

34.4%

 

 

37.0%

 

 

38.7%

 

 

36.1%

 

 

38.1%

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

172.8

 

 

 

147.0

 

 

 

166.2

 

 

 

471.6

 

 

 

488.5

 

Selling and marketing

 

74.7

 

 

 

73.6

 

 

 

83.1

 

 

 

225.4

 

 

 

242.6

 

General and administrative

 

67.8

 

 

 

74.1

 

 

 

73.3

 

 

 

214.8

 

 

 

218.8

 

Litigation settlement

 

169.5

 

 

 

 

 

169.5

 

 

Amortization of acquisition-related intangible assets

 

29.9

 

 

 

27.5

 

 

 

28.0

 

 

 

83.1

 

 

 

83.3

 

Restructuring, asset impairments and other, net

 

4.4

 

 

 

18.1

 

 

 

4.4

 

 

 

28.1

 

 

 

8.0

 

Goodwill and intangible asset impairment

 

 

0.4

 

 

 

 

1.6

 

 

 

3.3

 

Total operating expenses

 

519.1

 

 

 

340.7

 

 

 

355.0

 

 

 

1,194.1

 

 

 

1,044.5

 

Operating income (loss)

 

(43.9

)

 

 

158.3

 

 

 

241.6

 

 

 

293.8

 

 

 

624.5

 

Other income (expense), net:

 

 

 

 

 

 

 

 

 

Interest expense

 

(40.7

)

 

 

(33.7

)

 

 

(31.2

)

 

 

(106.1

)

 

 

(95.3

)

Interest income

 

2.3

 

 

 

3.0

 

 

 

1.3

 

 

 

7.8

 

 

 

3.3

 

Loss on debt refinancing and prepayment

 

(5.8

)

 

 

(0.4

)

 

 

(0.6

)

 

 

(6.2

)

 

 

(4.6

)

Gain on divestiture of business

 

 

 

0.4

 

 

 

 

5.0

 

Licensing income

 

 

 

1.0

 

 

 

 

32.9

 

Other income (expense)

 

3.5

 

 

 

(1.0

)

 

 

3.5

 

 

 

4.6

 

 

 

0.5

 

Other income (expense), net

 

(40.7

)

 

 

(32.1

)

 

 

(25.6

)

 

 

(99.9

)

 

 

(58.2

)

Income (loss) before income taxes

 

(84.6

)

 

 

126.2

 

 

 

216.0

 

 

 

193.9

 

 

 

566.3

 

Income tax (provision) benefit

 

24.6

 

 

 

(23.3

)

 

 

(48.9

)

 

 

(36.9

)

 

 

(102.4

)

Net income (loss)

 

(60.0

)

 

 

102.9

 

 

 

167.1

 

 

 

157.0

 

 

 

463.9

 

Less: Net income attributable to non-controlling interest

 

(0.7

)

 

 

(1.1

)

 

 

(0.2

)

 

 

(1.8

)

 

 

(2.1

)

Net income (loss) attributable to ON Semiconductor Corporation

$

 

(60.7

)

 

$

 

101.8

 

 

$

 

166.9

 

 

$

 

155.2

 

 

$

 

461.8

 

Net income (loss) per common share attributable to ON Semiconductor Corporation:

 

 

 

 

 

 

 

 

 

Basic

$

 

(0.15

)

 

$

 

0.25

 

 

$

 

0.39

 

 

$

 

0.38

 

 

$

 

1.08

 

Diluted

$

 

(0.15

)

 

$

 

0.24

 

 

$

 

0.38

 

 

$

 

0.37

 

 

$

 

1.05

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

410.4

 

 

 

411.9

 

 

 

425.5

 

 

 

411.0

 

 

 

426.1

 

Diluted

 

410.4

 

 

 

417.7

 

 

 

435.3

 

 

 

415.3

 

 

 

441.2

 

ON SEMICONDUCTOR CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEET

(in millions)

 

September

27, 2019

 

June 28,

2019

 

December

31, 2018

 

Assets

 

 

 

 

 

Cash and cash equivalents

$

 

928.7

 

 

$

 

885.2

 

 

$

 

1,069.6

 

Receivables, net

 

716.6

 

 

 

713.2

 

 

 

686.0

 

Inventories

 

1,240.7

 

 

 

1,273.8

 

 

 

1,225.2

 

Other current assets

 

187.0

 

 

 

192.0

 

 

 

187.0

 

Total current assets

 

3,073.0

 

 

 

3,064.2

 

 

 

3,167.8

 

Property, plant and equipment, net

 

2,602.1

 

 

 

2,620.0

 

 

 

2,549.6

 

Goodwill

 

1,659.2

 

 

 

1,552.5

 

 

 

932.5

 

Intangible assets, net

 

622.6

 

 

 

778.0

 

 

 

566.4

 

Deferred tax assets

 

291.5

 

 

 

242.0

 

 

 

266.2

 

Other assets

 

273.9

 

 

 

267.8

 

 

 

105.1

 

Total assets

$

 

8,522.3

 

 

$

 

8,524.5

 

 

$

 

7,587.6

 

Liabilities, Non-Controlling Interest and Stockholders’ Equity

 

 

 

 

 

Accounts payable

$

 

534.1

 

 

$

 

542.9

 

 

$

 

671.7

 

Accrued expenses and other current liabilities

 

730.9

 

 

 

618.2

 

 

 

659.1

 

Current portion of long-term debt

 

736.6

 

 

 

105.7

 

 

 

138.5

 

Total current liabilities

 

2,001.6

 

 

 

1,266.8

 

 

 

1,469.3

 

Long-term debt

 

2,878.8

 

 

 

3,550.8

 

 

 

2,627.6

 

Deferred tax liabilities

 

59.8

 

 

 

58.9

 

 

 

54.8

 

Other long-term liabilities

 

342.5

 

 

 

350.1

 

 

 

241.8

 

Total liabilities

 

5,282.7

 

 

 

5,226.6

 

 

 

4,393.5

 

ON Semiconductor Corporation stockholders’ equity:

 

 

 

 

 

Common stock

 

5.6

 

 

 

5.6

 

 

 

5.6

 

Additional paid-in capital

 

3,779.1

 

 

 

3,757.6

 

 

 

3,702.3

 

Accumulated other comprehensive loss

 

(55.6

)

 

 

(53.4

)

 

 

(37.9

)

Accumulated earnings

 

1,134.8

 

 

 

1,195.5

 

 

 

979.6

 

Less: Treasury stock, at cost

 

(1,648.6

)

 

 

(1,631.0

)

 

 

(1,478.0

)

Total ON Semiconductor Corporation stockholders’ equity

 

3,215.3

 

 

 

3,274.3

 

 

 

3,171.6

 

Non-controlling interest

 

24.3

 

 

 

23.6

 

 

 

22.5

 

Total stockholders' equity

 

3,239.6

 

 

 

3,297.9

 

 

 

3,194.1

 

Total liabilities and stockholders' equity

$

 

8,522.3

 

 

$

 

8,524.5

 

 

$

 

7,587.6

 

ON SEMICONDUCTOR CORPORATION

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) ADJUSTED EBITDA AND

NET CASH PROVIDED BY OPERATING ACTIVITIES

(in millions)

 

Quarters Ended

 

Nine Months Ended

 

September
27, 2019

 

June 28,
2019

 

September
28, 2018

 

September
27, 2019

 

September
28, 2018

Net income (loss)

$

 

(60.0

)

 

$

 

102.9

 

 

$

 

167.1

 

 

$

 

157.0

 

 

$

 

463.9

 

Adjusted for:

 

 

 

 

 

 

 

 

 

Licensing income

 

 

 

(1.0

)

 

 

 

(32.9

)

R&D costs related to licensing income

 

 

 

0.5

 

 

 

 

7.0

 

Restructuring, asset impairments and other, net

 

4.4

 

 

 

18.1

 

 

 

4.4

 

 

 

28.1

 

 

 

8.0

 

Goodwill and intangible asset impairment

 

 

0.4

 

 

 

 

1.6

 

 

 

3.3

 

Interest expense

 

40.7

 

 

 

33.7

 

 

 

31.2

 

 

 

106.1

 

 

 

95.3

 

Interest income

 

(2.3

)

 

 

(3.0

)

 

 

(1.3

)

 

 

(7.8

)

 

 

(3.3

)

Loss on debt refinancing and prepayment

 

5.8

 

 

 

0.4

 

 

 

0.6

 

 

 

6.2

 

 

 

4.6

 

Litigation settlement

 

169.5

 

 

 

 

 

169.5

 

 

Income tax provision (benefit)

 

(24.6

)

 

 

23.3

 

 

 

48.9

 

 

 

36.9

 

 

 

102.4

 

Net income attributable to non-controlling interest

 

(0.7

)

 

 

(1.1

)

 

 

(0.2

)

 

 

(1.8

)

 

 

(2.1

)

Depreciation and amortization

 

151.3

 

 

 

144.0

 

 

 

127.1

 

 

 

431.1

 

 

 

372.5

 

Amortization of fair market value step-up of inventory

 

19.0

 

 

 

0.6

 

 

 

0.2

 

 

 

19.6

 

 

 

0.4

 

Gain on divestiture of business

 

 

 

(0.4

)

 

 

 

(5.0

)

Adjustment to contingent consideration

 

 

 

 

 

(2.1

)

Third party acquisition and divestiture related costs

 

1.0

 

 

 

6.5

 

 

 

0.4

 

 

 

10.8

 

 

 

2.9

 

Indemnification gain

 

(2.9

)

 

 

 

 

(7.8

)

 

Adjusted EBITDA

 

301.2

 

 

 

325.8

 

 

 

377.5

 

 

 

949.5

 

 

 

1,014.9

 

Increase (decrease):

 

 

 

 

 

 

 

 

 

Licensing income

 

 

 

1.0

 

 

 

 

32.9

 

R&D costs related to licensing income

 

 

 

(0.5

)

 

 

 

(7.0

)

Restructuring, asset impairments and other, net

 

(4.4

)

 

 

(18.1

)

 

 

(4.4

)

 

 

(28.1

)

 

 

(8.0

)

Interest expense

 

(40.7

)

 

 

(33.7

)

 

 

(31.2

)

 

 

(106.1

)

 

 

(95.3

)

Interest income

 

2.3

 

 

 

3.0

 

 

 

1.3

 

 

 

7.8

 

 

 

3.3

 

Litigation settlement

 

(169.5

)

 

 

 

 

(169.5

)

 

Income tax (provision) benefit

 

24.6

 

 

 

(23.3

)

 

 

(48.9

)

 

 

(36.9

)

 

 

(102.4

)

Net income attributable to non-controlling interest

 

0.7

 

 

 

1.1

 

 

 

0.2

 

 

 

1.8

 

 

 

2.1

 

Amortization of fair market value step-up of inventory

 

(19.0

)

 

 

(0.6

)

 

 

(0.2

)

 

 

(19.6

)

 

 

(0.4

)

Adjustment to contingent consideration

 

 

 

 

 

2.1

 

Third party acquisition and divestiture related costs

 

(1.0

)

 

 

(6.5

)

 

 

(0.4

)

 

 

(10.8

)

 

 

(2.9

)

Indemnification gain

 

2.9

 

 

 

 

 

7.8

 

 

Loss on sale or disposal of fixed assets

 

0.1

 

 

 

 

1.2

 

 

 

0.5

 

 

 

3.6

 

Amortization of debt discount and issuance costs

 

3.3

 

 

 

3.4

 

 

 

3.1

 

 

 

9.9

 

 

 

9.8

 

Payments for term debt modification

 

 

 

 

 

(1.1

)

Share-based compensation expense

 

14.7

 

 

 

27.3

 

 

 

17.9

 

 

 

61.7

 

 

 

59.4

 

Non-cash interest on convertible notes

 

9.5

 

 

 

9.3

 

 

 

9.0

 

 

 

27.9

 

 

 

26.6

 

Non-cash asset impairment charges

 

 

2.9

 

 

 

2.6

 

 

 

2.9

 

 

 

4.6

 

Change in deferred tax balances

 

(21.5

)

 

 

3.3

 

 

 

36.7

 

 

 

10.8

 

 

 

79.9

 

Other

 

(0.1

)

 

 

2.9

 

 

 

(2.8

)

 

 

(1.5

)

 

 

(5.8

)

Changes in assets and liabilities

 

139.1

 

 

 

(74.4

)

 

 

(3.9

)

 

 

(105.1

)

 

 

(163.1

)

Net cash provided by operating activities

$

 

242.2

 

 

$

 

222.4

 

 

$

 

358.2

 

 

 

603.0

 

 

$

 

853.2

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

$

 

(111.7

)

 

$

 

(153.5

)

 

$

 

(130.4

)

 

$

 

(422.2

)

 

$

 

(382.8

)

Proceeds from sales of property, plant and equipment

 

0.1

 

 

 

1.4

 

 

 

0.3

 

 

 

1.5

 

 

 

6.3

 

Deposits utilized (made) for purchase of property, plant and equipment

 

0.1

 

 

 

9.8

 

 

 

8.1

 

 

 

(0.2

)

 

 

(5.6

)

Purchase of business, net of cash acquired

 

(21.0

)

 

 

(867.0

)

 

 

(0.2

)

 

 

(888.0

)

 

 

(70.9

)

Purchase of license and deposit made for manufacturing facility

 

 

(100.0

)

 

 

 

(100.0

)

 

Proceeds from divestiture of business and release of escrow

 

 

5.0

 

 

 

1.7

 

 

 

5.0

 

 

 

7.3

 

Proceeds from repayment of note receivable

 

 

 

 

 

10.2

 

Equity method investment

 

 

 

 

 

(19.8

)

Net cash used in investing activities

$

 

(132.5

)

 

$

 

(1,104.3

)

 

$

 

(120.5

)

 

 

(1,403.9

)

 

$

 

(455.3

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Proceeds for the issuance of common stock under the ESPP

 

5.8

 

 

 

6.4

 

 

$

 

11.8

 

 

$

 

19.6

 

 

$

 

18.7

 

Proceeds from exercise of stock options

 

0.4

 

 

 

0.4

 

 

 

0.1

 

 

 

1.3

 

 

 

4.4

 

Payment of tax withholding for RSUs

 

(4.4

)

 

 

(1.1

)

 

 

(9.3

)

 

 

(31.6

)

 

 

(29.2

)

Repurchase of common stock

 

(13.2

)

 

 

(50.8

)

 

 

(75.0

)

 

 

(139.0

)

 

 

(115.0

)

Borrowings under debt agreements

 

500.5

 

 

 

900.0

 

 

 

0.7

 

 

 

1,404.8

 

 

 

8.2

 

Payment of debt issuance and other financing costs

 

(17.2

)

 

 

(4.7

)

 

 

 

(21.9

)

 

Repayment of long-term debt

 

(541.5

)

 

 

(26.4

)

 

 

(64.5

)

 

 

(580.1

)

 

 

(279.9

)

Release of escrow related to prior acquisition

 

(10.4

)

 

 

 

 

(10.4

)

 

Payment of finance lease obligations

 

(0.2

)

 

 

(0.2

)

 

 

(0.1

)

 

 

(0.6

)

 

 

(3.3

)

Net cash provided by (used in) financing activities

$

 

(80.2

)

 

$

 

823.6

 

 

$

 

(136.3

)

 

 

642.1

 

 

$

 

(396.1

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

0.1

 

 

 

0.3

 

 

 

(0.6

)

 

 

0.4

 

 

 

0.1

 

Net increase (decrease) in cash, cash equivalents and restricted cash

$

 

29.6

 

 

$

 

(58.0

)

 

$

 

100.8

 

 

 

(158.4

)

 

$

 

1.9

 

Cash, cash equivalents and restricted cash, beginning of period

 

899.1

 

 

 

957.1

 

 

 

867.7

 

 

 

1,087.1

 

 

 

966.6

 

Cash, cash equivalents and restricted cash, end of period

$

 

928.7

 

 

$

 

899.1

 

 

$

 

968.5

 

 

 

928.7

 

 

$

 

968.5

 

ON SEMICONDUCTOR CORPORATION

RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES

(in millions, except per share and percentage data)

 

 

 

Quarters Ended

 

Nine Months Ended

 

 

 

September
27, 2019

 

June 28,
2019

 

September
28, 2018

 

September
27, 2019

 

September
28, 2018

Reconciliation of GAAP gross profit to non-GAAP gross profit:

 

 

 

 

 

 

 

 

 

GAAP gross profit

$

 

475.2

 

 

$

 

499.0

 

 

$

 

596.6

 

 

$

 

1,487.9

 

 

$

 

1,669.0

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

a)

Expensing of appraised inventory at fair market value step-up

 

19.0

 

 

 

0.6

 

 

 

0.2

 

 

 

19.6

 

 

 

0.4

 

 

 

Total special items

 

19.0

 

 

 

0.6

 

 

 

0.2

 

 

 

19.6

 

 

 

0.4

 

Non-GAAP gross profit

$

 

494.2

 

 

$

 

499.6

 

 

$

 

596.8

 

 

$

 

1,507.5

 

 

$

 

1,669.4

 

Reconciliation of GAAP gross margin to non-GAAP gross margin:

 

 

 

 

 

 

 

 

 

GAAP gross margin

 

34.4

 

%

 

 

37.0

%

 

 

38.7

%

 

 

36.1

%

 

 

38.1

%

 

Special items:

 

 

 

 

 

 

 

 

 

 

a)

Expensing of appraised inventory at fair market value step-up

 

1.4

 

%

 

 

0.1

%

 

%

 

 

0.5

%

 

%

 

 

Total special items

 

1.4

 

%

 

 

0.1

%

 

%

 

 

0.5

%

 

 

0.1

%

Non-GAAP gross margin

 

35.8

 

%

 

 

37.1

%

 

 

38.7

%

 

 

36.6

%

 

 

38.2

%

Reconciliation of GAAP operating expenses to non-GAAP operating expenses:

 

 

 

 

 

 

 

 

 

GAAP operating expenses

$

 

519.1

 

 

$

 

340.7

 

 

$

 

355.0

 

 

$

 

1,194.1

 

 

$

 

1,044.5

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

a)

Amortization of acquisition-related intangible assets

 

(29.9

)

 

 

(27.5

)

 

 

(28.0

)

 

 

(83.1

)

 

 

(83.3

)

 

b)

Restructuring, asset impairments and other, net

 

(4.4

)

 

 

(18.1

)

 

 

(4.4

)

 

 

(28.1

)

 

 

(8.0

)

 

c)

Goodwill and intangible asset impairment

 

 

(0.4

)

 

 

 

(1.6

)

 

 

(3.3

)

 

d)

Third party acquisition and divestiture related costs

 

(1.0

)

 

 

(6.5

)

 

 

(0.4

)

 

 

(10.8

)

 

 

(2.9

)

 

e)

R&D costs related to licensing income

 

 

 

(0.5

)

 

 

 

(7.0

)

 

f)

Litigation settlement

 

(169.5

)

 

 

 

 

(169.5

)

 

 

 

Total special items

 

(204.8

)

 

 

(52.5

)

 

 

(33.3

)

 

 

(293.1

)

 

 

(104.5

)

Non-GAAP operating expenses

$

 

314.3

 

 

$

 

288.2

 

 

$

 

321.7

 

 

$

 

901.0

 

 

$

 

940.0

 

Reconciliation of GAAP operating income (loss) to non-GAAP operating income (loss):

 

 

 

 

 

 

 

 

 

GAAP operating income (loss)

$

 

(43.9

)

 

$

 

158.3

 

 

$

 

241.6

 

 

$

 

293.8

 

 

$

 

624.5

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

a)

Expensing of appraised inventory at fair market value step-up

 

19.0

 

 

 

0.6

 

 

 

0.2

 

 

 

19.6

 

 

 

0.4

 

 

b)

Amortization of acquisition-related intangible assets

 

29.9

 

 

 

27.5

 

 

 

28.0

 

 

 

83.1

 

 

 

83.3

 

 

c)

Restructuring, asset impairments and

other, net

 

 

 

 

4.4

 

 

 

 

 

 

 

 

 

 

18.1

 

 

 

 

 

 

4.4

 

 

 

 

 

 

28.1

 

 

 

 

 

 

8.0

 

 

 

 

d)

Goodwill and intangible asset impairment

 

 

0.4

 

 

 

 

1.6

 

 

 

3.3

 

 

e)

Third party acquisition and divestiture related costs

 

1.0

 

 

 

6.5

 

 

 

0.4

 

 

 

10.8

 

 

 

2.9

 

 

f)

R&D costs related to licensing income

 

 

 

0.5

 

 

 

 

7.0

 

 

g)

Litigation settlement

 

169.5

 

 

 

 

 

169.5

 

 

 

 

Total special items

 

223.8

 

 

 

53.1

 

 

 

33.5

 

 

 

312.7

 

 

 

104.9

 

Non-GAAP operating income

$

 

179.9

 

 

$

 

211.4

 

 

$

 

275.1

 

 

$

 

606.5

 

 

$

 

729.4

 

Reconciliation of GAAP operating margin to non-GAAP operating margin (operating income / revenue) :

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

(3.2

)

%

 

 

11.7

%

 

 

15.7

%

 

 

7.1

%

 

 

14.3

%

 

Special items:

 

 

 

 

 

 

 

 

 

 

a)

Expensing of appraised inventory at fair market value step-up

 

1.4

 

%

 

 

0.1

%

 

%

 

 

0.5

%

 

%

 

b)

Amortization of acquisition-related intangible assets

 

2.2

 

%

 

 

2.0

%

 

 

1.8

%

 

 

2.0

%

 

 

1.9

%

 

c)

Restructuring, asset impairments and other, net

 

0.3

 

%

 

 

1.3

%

 

 

0.3

%

 

 

0.7

%

 

 

0.2

%

 

d)

Goodwill and intangible asset impairment

%

 

%

 

%

 

%

 

 

0.1

%

 

e)

Third party acquisition and divestiture related costs

 

0.1

 

%

 

 

0.5

%

 

%

 

 

0.3

%

 

 

0.1

%

 

f)

R&D costs related to licensing income

%

 

%

 

%

 

%

 

 

0.2

%

 

g)

Litigation settlement

 

12.3

 

%

 

%

 

%

 

 

4.1

%

 

%

 

 

Total special items

 

16.2

 

%

 

 

4.0

%

 

 

2.1

%

 

 

7.6

%

 

 

2.4

%

Non-GAAP operating margin

 

13.0

 

%

 

 

15.7

%

 

 

17.8

%

 

 

14.7

%

 

 

16.7

%

Reconciliation of GAAP income (loss) before income taxes to non-GAAP income before income taxes:

 

 

 

 

 

 

 

 

 

GAAP income (loss) before income taxes

$

 

(84.6

)

 

$

 

126.2

 

 

$

 

216.0

 

 

$

 

193.9

 

 

$

 

566.3

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

a)

Expensing of appraised inventory at fair market value step-up

 

19.0

 

 

 

0.6

 

 

 

0.2

 

 

 

19.6

 

 

 

0.4

 

 

b)

Amortization of acquisition-related intangible assets

 

29.9

 

 

 

27.5

 

 

 

28.0

 

 

 

83.1

 

 

 

83.3

 

 

c)

Restructuring, asset impairments and other, net

 

4.4

 

 

 

18.1

 

 

 

4.4

 

 

 

28.1

 

 

 

8.0

 

 

d)

Goodwill and intangible asset impairment

 

 

0.4

 

 

 

 

1.6

 

 

 

3.3

 

 

e)

Third party acquisition and divestiture related costs

 

1.0

 

 

 

6.5

 

 

 

0.4

 

 

 

10.8

 

 

 

2.9

 

 

f)

R&D costs related to licensing income

 

 

 

0.5

 

 

 

 

7.0

 

 

g)

Litigation settlement

 

169.5

 

 

 

 

 

169.5

 

 

 

h)

Loss on debt refinancing and prepayment

 

5.8

 

 

 

0.4

 

 

 

0.6

 

 

 

6.2

 

 

 

4.6

 

 

i)

Non-cash interest on convertible notes

 

9.5

 

 

 

9.3

 

 

 

9.0

 

 

 

27.9

 

 

 

26.6

 

 

j)

Indemnification gain

 

(2.9

)

 

 

 

 

(7.8

)

 

 

k)

Adjustment to contingent consideration

 

 

 

 

 

(2.1

)

 

l)

Licensing income

 

 

 

(1.0

)

 

 

 

(32.9

)

 

m)

Gain on divestiture of business

 

 

 

(0.4

)

 

 

 

(5.0

)

 

 

Total special items

 

236.2

 

 

 

62.8

 

 

 

41.7

 

 

 

339.0

 

 

 

96.1

 

Non-GAAP income before income taxes

$

 

151.6

 

 

$

 

189.0

 

 

$

 

257.7

 

 

$

 

532.9

 

 

$

 

662.4

 

Reconciliation of GAAP net income (loss) attributable to ON Semiconductor Corporation to non-GAAP net income attributable to ON Semiconductor Corporation:

 

 

 

 

 

 

 

 

 

GAAP net income (loss) attributable to ON Semiconductor Corporation

$

 

(60.7

)

 

$

 

101.8

 

 

$

 

166.9

 

 

$

 

155.2

 

 

$

 

461.8

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

a)

Expensing of appraised inventory at fair market value step-up

 

19.0

 

 

 

0.6

 

 

 

0.2

 

 

 

19.6

 

 

 

0.4

 

 

b)

Amortization of acquisition-related intangible assets

 

29.9

 

 

 

27.5

 

 

 

28.0

 

 

 

83.1

 

 

 

83.3

 

 

c)

Restructuring, asset impairments and other, net

 

4.4

 

 

 

18.1

 

 

 

4.4

 

 

 

28.1

 

 

 

8.0

 

 

d)

Goodwill and intangible asset impairment

 

 

0.4

 

 

 

 

1.6

 

 

 

3.3

 

 

e)

Third party acquisition and divestiture related costs

 

1.0

 

 

 

6.5

 

 

 

0.4

 

 

 

10.8

 

 

 

2.9

 

 

f)

R&D costs related to licensing income

 

 

 

0.5

 

 

 

 

7.0

 

 

g)

Litigation settlement

 

169.5

 

 

 

 

 

169.5

 

 

 

h)

Loss on debt refinancing and prepayment

 

5.8

 

 

 

0.4

 

 

 

0.6

 

 

 

6.2

 

 

 

4.6

 

 

i)

Non-cash interest on convertible notes

 

9.5

 

 

 

9.3

 

 

 

9.0

 

 

 

27.9

 

 

 

26.6

 

 

j)

Indemnification gain

 

(2.9

)

 

 

 

 

(7.8

)

 

 

k)

Adjustment to contingent consideration

 

 

 

 

 

(2.1

)

 

l)

Licensing income

 

 

 

(1.0

)

 

 

 

(32.9

)

 

m)

Gain on divestiture of business

 

 

 

(0.4

)

 

 

 

(5.0

)

 

n)

Adjustment of income taxes

 

(38.7

)

 

 

10.4

 

 

 

36.3

 

 

 

(5.4

)

 

 

57.4

 

 

 

Total special items

 

197.5

 

 

 

73.2

 

 

 

78.0

 

 

 

333.6

 

 

 

153.5

 

Non-GAAP net income attributable to ON Semiconductor Corporation

$

 

136.8

 

 

$

 

175.0

 

 

$

 

244.9

 

 

$

 

488.8

 

 

$

 

615.3

 

Adjustment of income taxes:

 

 

 

 

 

 

 

 

 

Tax adjustment for special items (1)

$

 

(49.6

)

 

$

 

(13.2

)

 

$

 

(8.8

)

 

$

 

(71.2

)

 

$

 

(20.2

)

Other non-GAAP tax adjustment (2)

 

10.9

 

 

 

20.0

 

 

 

45.1

 

 

 

61.8

 

 

 

77.6

 

Tax indemnified by third parties

 

 

3.6

 

 

 

 

4.0

 

 

 

 

Total adjustment of income taxes

$

 

(38.7

)

 

$

 

10.4

 

 

$

 

36.3

 

 

$

 

(5.4

)

 

$

 

57.4

 

Reconciliation of GAAP diluted share count to non-GAAP diluted share count:

 

 

 

 

 

 

 

 

 

GAAP diluted share count

 

410.4

 

 

 

417.7

 

 

 

435.3

 

 

 

415.3

 

 

 

441.2

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

a)

Less: dilutive share count attributable to convertible notes

 

 

(3.9

)

 

 

(5.9

)

 

 

(2.6

)

 

 

(10.4

)

 

b)

Add: dilutive shares attributed to share-based awards

 

1.9

 

 

 

 

 

0.6

 

 

 

 

Total special items

 

1.9

 

 

 

(3.9

)

 

 

(5.9

)

 

 

(2.0

)

 

 

(10.4

)

Non-GAAP diluted share count

 

412.3

 

 

 

413.8

 

 

 

429.4

 

 

 

413.3

 

 

 

430.8

 

Non-GAAP diluted earnings per share:

 

 

 

 

 

 

 

 

 

Non-GAAP net income attributable to ON Semiconductor Corporation

$

 

136.8

 

 

$

 

175.0

 

 

$

 

244.9

 

 

$

 

488.8

 

 

$

 

615.3

 

Non-GAAP diluted share count

 

412.3

 

 

 

413.8

 

 

 

429.4

 

 

 

413.3

 

 

 

430.8

 

Non-GAAP diluted earnings per share

$

 

0.33

 

 

$

 

0.42

 

 

$

 

0.57

 

 

$

 

1.18

 

 

$

 

1.43

 

Reconciliation of net cash provided by operating activities to free cash flow:

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

$

 

242.2

 

 

$

 

222.4

 

 

$

 

358.2

 

 

$

 

603.0

 

 

$

 

853.2

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

a)

Purchase of property, plant and equipment

 

(111.7

)

 

 

(153.5

)

 

 

(130.4

)

 

 

(422.2

)

 

 

(382.8

)

 

 

Total special items

 

(111.7

)

 

 

(153.5

)

 

 

(130.4

)

 

 

(422.2

)

 

 

(382.8

)

Free cash flow

$

 

130.5

 

 

$

 

68.9

 

 

$

 

227.8

 

 

$

 

180.8

 

 

$

 

470.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Tax impact of non-GAAP special items (a-m) is calculated using the federal statutory rate of 21% for all periods presented.

 

(2)

 

The income tax adjustment primarily represents the use of the net operating loss, non-cash impact of not asserting indefinite reinvestment on earnings of our foreign subsidiaries, deferred tax expense not affecting taxes payable, and non-cash expense (benefit) related to uncertain tax positions.


« Previous Page 1 | 2 | 3 | 4 | 5  Next Page »



Review Article Be the first to review this article
Featured Video
Latest Blog Posts
Alex Carrick, Chief Economist at ConstructConnectThe AEC Lens
by Alex Carrick, Chief Economist at ConstructConnect
Multiple Layers to the Inflation Watch Story
Jobs
Electrical Designer for Dinter Engineering at Reno, Nevada
Electrical Engineer for Dinter Engineering at Reno, Nevada
BIM/CAD Specialist for Gordon Prill, Inc at Sunnyvale, California
Senior Highway Engineer for RS&H at Jacksonville, Florida
Senior Project Architect for Gordon Prill, Inc at Sunnyvale, California
Construction Project Manager for Gordon Prill, Inc at Sunnyvale, California
Upcoming Events
ICSD 2021 : 9th International Conference on Sustainable Development, 8 - 9 September Rome, Italy at Roma Eventi, Pontifical Gregorian University Piazza della Pilotta, 4 Rome Rome Italy - Sep 8 - 9, 2021
Urban Planning & Architectural Design for Sustainable Development – 6th Edition at University of Florence Florence Italy - Sep 14 - 16, 2021
World Tunnel Congress 2021 at Copenhagen Denmark - Sep 20 - 24, 2021
NIBS Building Innovation 2021: Virtual Edition. at United States - Sep 27 - 29, 2021



© 2021 Internet Business Systems, Inc.
670 Aberdeen Way, Milpitas, CA 95035
+1 (408) 882-6554 — Contact Us, or visit our other sites:
TechJobsCafe - Technical Jobs and Resumes EDACafe - Electronic Design Automation GISCafe - Geographical Information Services  MCADCafe - Mechanical Design and Engineering ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy PolicyAdvertise